[Congressional Record Volume 141, Number 62 (Tuesday, April 4, 1995)]
[Extensions of Remarks]
[Pages E776-E777]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


  INTRODUCTION OF THE AMERICAN HOMEMAKERS/CAREGIVERS AND MIDDLE-CLASS 
                      FLEXIBLE SAVINGS ACT OF 1995

                                 ______


                          HON. BERNARD SANDERS

                               of vermont

                    in the house of representatives

                         Tuesday, April 4, 1995
  Mr. SANDERS. Mr. Speaker, I am pleased to be an original cosponsor of 
the American Homemakers/Caregivers and Middle-Class Flexible Savings 
Act of 1995. This bill is being introduced by my colleague, Maurice 
Hinchey, on behalf of the Progressive Caucus as part of our 11-point 
alternative to the Republican Contract With America.
  My constituents have impressed upon me the growing financial plight 
of many middle- and low-income working Americans. They are working 
harder and longer and finding it more difficult all of the time to make 
financial ends meet, let alone put any money into savings. This 
legislation will make it easier for middle- and low-income Americans 
who earn up to $75,000 to save more, while giving those Americans who 
are in an unforeseen financial pinch greater penalty-free access to 
their Individual Retirement Account [IRA] funds.
  This Progressive Caucus bill will help middle- and low-income 
taxpayers in four fundamental ways.
  First, it will substantially increase the level of contributions that 
they can deposit in an IRA. Since IRA's were first made possible in 
1981, the contribution levels governing how much can be contributed 
annually and who can deduct their contributions, in sum or in part, 
have eroded due to inflation.
  Our bill increases contribution levels to make up for inflation since 
1981. It also indexes contribution levels yearly to keep pace with 
inflation.
  Second, our bill authorizes higher IRA contribution levels for 
nonworking spouses in households with one or more children under the 
age of 6. That contribution level will also be indexed to keep pace 
with inflation.
  This provision could be called the IRA homemaker provision. Arguably, 
those Americans who most need to save for retirement 
[[Page E777]]  are those who stay at home--women primarily--to nurture 
their children in their most important formative years. That financial 
sacrifice should be recognized and redressed by allowing nonworking 
spouses with young children to better save for later years.
  Third, our bill will also allow middle-class taxpayers greater 
flexibility to withdraw their IRA funds without being subject to the 10 
percent penalty in order to pay for expenses for higher or vocational 
education, to pay catastrophic medical expenses, to start a small 
business, to buy a first home, or to meet unemployment emergencies. 
Arguably, wealthier taxpayers don't have commensurate cashflow problems 
vis a vis their IRA's and should still be encouraged to keep their 
money in savings.
  There is no question that more Americans are confronting daunting 
educational expenses. At the rate tuition costs
 continue to rise--at least twice the rate of inflation--4 years at a 
State university by the year 2000 may cost over $50,000. Also growing 
numbers of American workers are returning to classrooms to prepare for 
midcareer changes or to upgrade existing job skills. This legislation 
will permit withdrawals for higher education and/or vocational 
education for many of these Americans who are struggling to put 
themselves or their children through college.

  With health care costs skyrocketing, we simply must find ways to help 
ease the burden of sudden medical expenses for American working 
families. A serious illness can be financially devastating to all but 
the very wealthy. Our bill will allow individuals and families to 
withdraw IRA funds penalty-free for catastrophic medical expenses 
during the taxable year to the degree that the amount of such expenses 
does not exceed 7\1/2\ percent of adjusted gross income--that is, the 
existing threshold for deductibility of medical expenses for itemizers. 
Individuals could draw upon their IRA's for themselves, spouses, 
children, and/or parents.
  It is also true that most of the new jobs being created are to be 
found in America's small businesses. Therefore, it should be made 
easier for entrepreneurial Americans to amass startup capital when they 
decide to start a new business in midcareer or otherwise.
  Finally, our bill also extends a helping hand to unemployed Americans 
as well as first-time homebuyers.
  Let me conclude by underscoring that Progressive Caucus members 
believe if there is to be tax cut legislation enacted this year that 
tax relief should be focused upon middle- and low-income taxpayers. 
Well-to-do individuals and corporations already received 
disproportionate tax cuts throughout the 1980's.
  It is fitting and proper that the tax relief to be provided under our 
bill is to be financed, at least in part, by taking a first step to cut 
tens of billions in corporate welfare in the Federal budget--the 
establishment of a minimum tax on the income of foreign-owned companies 
earned from business activities in the United States.


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